Cognizant targets a return to the top tier of India’s IT services sector by 2027.
At its annual investor meeting, CEO Ravi Kumar outlined the company’s ambition to join India’s top four IT firms — currently TCS, Infosys, HCL Technologies, and Wipro — by improving revenue, market share, large deal wins, and margin growth.
Once known for consistent double-digit growth, Cognizant has lagged behind its peers in recent years. Kumar, who took the helm in 2023 after a long tenure at Infosys, said the company ranked 10th in 2022 in terms of growth, trailing peers by 8%.
That gap narrowed to 3% in his first year and has reached industry parity in 2024.
Flat Organic Growth Remains a Challenge
Cognizant reported a 2% revenue increase in 2024, with constant currency growth at 1.9%. However, this includes a 2% boost from its acquisitions of Belcan and Thirdera.
Excluding these, organic growth has remained flat or negative for the second consecutive year — a critical challenge for leadership.
With its largest workforce based in India, the company must address persistent issues, including attrition and sluggish market share growth.
Focus Areas: Talent, AI, and Platform-Led Growth
To drive a turnaround, Cognizant is prioritizing three strategic areas: talent upskilling, platform-led business models, and leadership in generative AI.
Around 230,000 employees have been trained in AI, with 12,000 roles eliminated due to automation.
Kumar emphasized productivity gains through industrializing AI, leveraging AI agents, and shifting to machine-generated code.
This transformation is central to positioning Cognizant as a high-growth tech services leader in the AI era.
Margins Show Modest Recovery, But Still Lag
Chief Financial Officer Jatin Dalal shared that operating margins, long a concern for investors, are expected to improve slightly.
Cognizant posted an adjusted operating margin of 15.3% in 2024, with guidance of 15.5%–15.7% for 2025 — its most optimistic forecast in five years.
Despite the positive outlook, margins remain below the pre-pandemic benchmark of 18%.
Higher compensation costs have weighed on profitability, although cost-saving initiatives under the NextGen program and favorable currency impacts provided some relief.
Note: We are also on WhatsApp, LinkedIn, Google News, and YouTube. To get the latest news updates, subscribe to our channels. WhatsApp: Click Here, Google News: Click Here, YouTube: Click Here, and LinkedIn: Click Here.
